Rogers Communications Raises Dividends

Rogers Communications Inc. (RG) could hike its dividend a further 50% to 75¢ in 2008 if the communications company remains comfortable with its current payout policy, according to Desjardins Securities analyst Joseph MacKay. On Monday, Rogers raised its annual dividend from 16¢ to 50¢ for both Class A and B shares.

He also compared Rogers shares to that of competitor Shaw Communications Inc. (NYSE:SJR), with the latter having traded at slight premium because it is viewed as a takeover target. However, Mr. MacKay thinks highly of this premium due to the fact that Shaw has been returning its free cash flow to shareholders via share buybacks and dividends.

Given Rogers’ dividend increase, he sees the valuation gap between the two companies narrowing. Mr. MacKay reiterated his “top pick” rating, and C$53 price target on Rogers' shares, which represents an upside of roughly 19%.

RBC Capital Markets analyst Jonathan Allen agrees that what he considered a surprising dividend boost will be a catalyst for Rogers' shares. He reiterated his “top pick” rating, and C$52 price target.

While the stock got a healthy lift on Monday following the news, “the higher dividend is just the start to Rogers’ transition to a more shareholder-friendly company and believe there is still significant upside to RCI shares,” Mr. Allen said in a research note. It also added that the company could, and should, announce a share repurchase program by 2008.

“Rogers is transforming from a perceived high-risk/high-leverage company into a blue-chip stock due to consistent profitability, falling debt leverage and is starting to return capital to shareholders,” he added.

We only use your contact details to reply to your request for more information.We do not sell the personal contact data you submit to anyone else.

Thank you for your interest in Seeking Alpha PROWe look forward to contacting you shortly for a conversation.

Thank you for your interest in Seeking Alpha PRO

Our PRO subscription service was created for fund managers, and the cost of the product is
prohibitive for most individual investors.
PRO Alerts is our flagship product for individual investors who want to be faster
and smarter about their stocks. To learn more about it, click here.
If you are an investment professional with over $1M AUM and received this message
in error, click here and you will be contacted shortly.

Thank you for your interest in Seeking Alpha PROWe look forward to contacting you when we have an individual investor product ready!